IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Tekscend Photomask / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tekscend-photomask-corp" target="_blank" data-smartkarma-citation="entities:45819:1" rel="noopener">Tekscend Photomask (429A JP)</a> is a global leader in semiconductor photomasks. It is seeking to raise up to JPY123 billion (US$828 million). Pricing is on 30 September.</li>
<li>I previously discussed the IPO in <a href="https://www.smartkarma.com/insights/tekscend-photomask-429a-jp-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:203592" rel="noopener">Tekscend Photomask (429A JP) IPO: The Bull Case</a> and <a href="https://www.smartkarma.com/insights/tekscend-photomask-429a-jp-ipo-the-bear-case" target="_blank" data-smartkarma-citation="insights:203753" rel="noopener">Tekscend Photomask (429A JP) IPO: The Bear Case</a>. </li>
<li>In this note, I present my forecasts and discuss valuation. My analysis suggests that Tekscend is attractively valued at the IPO price range compared to peer multiples.</li>
</ul>



Tekscend Photomask (429A JP) is a global leader in semiconductor photomasks. It is seeking to raise up to JPY123 billion (US$828 million). Pricing is on 30 September.
I previously discussed the IPO in Tekscend Photomask (429A JP) IPO: The Bull Case and Tekscend Photomask (429A JP) IPO: The Bear Case. 
In this note, I present my forecasts and discuss valuation. My analysis suggests that Tekscend is attractively valued at the IPO price range compared to peer multiples.


Tekscend Photomask (429A JP) IPO: Valuation Insights

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tekscend-photomask-corp" target="_blank" data-smartkarma-citation="entities:45819:1" rel="noopener">Tekscend Photomask (429A JP)</a>, a manufacturer and distributor of semiconductor photomasks, aims to raise around US$830m in its Japan IPO.</li>
<li>TP is a global provider of photomasks and related support services. It has been the leader in the merchant photomask market in terms of sales since 2016.</li>
<li>We have looked at the company's past performance in our previous note. In this note, we will  undertake a peer comparison.</li>
</ul>



Tekscend Photomask (429A JP), a manufacturer and distributor of semiconductor photomasks, aims to raise around US$830m in its Japan IPO.
TP is a global provider of photomasks and related support services. It has been the leader in the merchant photomask market in terms of sales since 2016.
We have looked at the company's past performance in our previous note. In this note, we will  undertake a peer comparison.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/tekscend-photomask-corp" target="_blank" data-smartkarma-citation="entities:45819:1" rel="noopener">Tekscend Photomask (429A JP)</a> is a global leader in semiconductor photomasks. It is seeking to raise up to JPY123 billion (US$832 million). Pricing is on 30 September.</li>
<li>In <a href="https://www.smartkarma.com/insights/tekscend-photomask-429a-jp-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:203592" rel="noopener">Tekscend Photomask (429A JP) IPO: The Bull Case</a>, I highlighted the key elements of the bull case. In this note, I outline the bear case.</li>
<li>The bear case rests on its worrisome revenue growth trends, weakening lead revenue indicators, cash burn, and large post-IPO share overhang. </li>
</ul>



Tekscend Photomask (429A JP) is a global leader in semiconductor photomasks. It is seeking to raise up to JPY123 billion (US$832 million). Pricing is on 30 September.
In Tekscend Photomask (429A JP) IPO: The Bull Case, I highlighted the key elements of the bull case. In this note, I outline the bear case.
The bear case rests on its worrisome revenue growth trends, weakening lead revenue indicators, cash burn, and large post-IPO share overhang. 


Tekscend Photomask (429A JP) IPO: The Bear Case

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tekscend-photomask-corp" target="_blank" data-smartkarma-citation="entities:45819:1" rel="noopener">Tekscend Photomask (429A JP)</a> is a global leader in semiconductor photomasks. It is seeking to raise up to JPY123 billion (US$832 million). Pricing is on 30 September.   </li>
<li>Tekscend, which was carved out of <a href="https://www.smartkarma.com/entities/toppan-printing-co-ltd" target="_blank" data-smartkarma-citation="entities:11875:1" rel="noopener">Toppan Printing (7911 JP)</a> in 2022, is owned by Toppan (with a 50.1% stake) and <a href="https://www.smartkarma.com/entities/integral-corp" target="_blank" data-smartkarma-citation="entities:40028:1" rel="noopener">Integral (5842 JP)</a> (with a 49.9% stake).   </li>
<li>The bull case rests on its leading market position, attractive market opportunity, stable underlying margins, net cash position, and attractive dividend policy. </li>
</ul>



Tekscend Photomask (429A JP) is a global leader in semiconductor photomasks. It is seeking to raise up to JPY123 billion (US$832 million). Pricing is on 30 September.   
Tekscend, which was carved out of Toppan Printing (7911 JP) in 2022, is owned by Toppan (with a 50.1% stake) and Integral (5842 JP) (with a 49.9% stake).   
The bull case rests on its leading market position, attractive market opportunity, stable underlying margins, net cash position, and attractive dividend policy. 


Tekscend Photomask (429A JP) IPO: The Bull Case

Fundamental Short Selling Research

Eric Fernandez, CFA

TwoRiversAnalytics

Equity Bottom-Up

Cf Industries Holdings / Equity Bottom-Up

<ul>
<li>This model seeks companies that are potentially “overearning”, defined as companies with unusually high margins relative to their own history or relative to the industry. </li>
<li>The reasons for the margin increases are sometimes unsustainable or fraudulent. The  critical judgement involves to what extent unsustainable margins are embedded in a company’s forecasts and/or the stock’s valuation. </li>
<li>These shorts tend to have moderate to higher betas, higher valuations due to recent strong results and good short responses to subsequently disappointing earnings.</li>
</ul>


This model seeks companies that are potentially “overearning”, defined as companies with unusually high margins relative to their own history or relative to the industry. 
The reasons for the margin increases are sometimes unsustainable or fraudulent. The  critical judgement involves to what extent unsustainable margins are embedded in a company’s forecasts and/or the stock’s valuation. 
These shorts tend to have moderate to higher betas, higher valuations due to recent strong results and good short responses to subsequently disappointing earnings.


Overearning Short Candidates, CF Industries, Photronics, LSB Industries, Builders FirstSource

United States

Photronics, Inc. manufactures photomasks, which are high precision quartz plates that contain microscopic images of electronic circuits.  The Company's products are used to transfer circuit patterns onto semiconductor wafers during the fabrication of integrated circuits.  Photronics operates manufacturing facilities in Asia, Europe, and North America.

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Photronics Inc (PLAB US)

Tekscend Photomask (429A JP) IPO: Valuation Insights

Tekscend is seeking to raise up to JPY123 billion (US$828 million). My analysis suggests that Tekscend is attractively valued at the IPO price...

Arun George

Tekscend Photomask IPO - Peer Comparison

Tekscend Photomask (429A JP), a manufacturer and distributor of semiconductor photomasks, aims to raise around US$830m in its Japan IPO. In this...

Sumeet Singh

Tekscend Photomask (429A JP) IPO: The Bear Case

Tekscend is seeking to raise up to JPY123 billion (US$832 million). I previously discussed the bull case. In this note, I outline the bear case.

Arun George

Tekscend Photomask (429A JP) IPO: The Bull Case

Tekscend Photomask, a global leader in semiconductor photomasks, is seeking to raise up to JPY123 billion (US$832 million). In this note, I discuss...

Arun George

Overearning Short Candidates, CF Industries, Photronics, LSB Industries, Builders FirstSource

Margin over-earners are fertile hunting ground for shorts if the reasons for the margin increase are either unsustainable or fraudulent: CF...

Eric Fernandez, CFA

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